Exhibit 10.127
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR HIENERGY TECHNOLGIES, INC. SHALL
HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES
UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES
LAWS IS NOT REQUIRED.
HiEnergy Technologies, Inc.
Senior Convertible Promissory Bridge Note
U.S. $_________________ Issuance Date: ____________
No.: 10-2005-HIET-__ Maturity Date: ____________
FOR VALUE RECEIVED, the undersigned, HiEnergy Technologies Inc., a
Delaware corporation (the "Company"), hereby promises to pay to the order of
_________________, or any future permitted holder of this secured convertible
bridge note (the "Payee"), at the principal office of the Payee set forth
herein, or at such other place as the holder may designate in writing to the
Company, the principal sum of _________________ Dollars ($_______) or such other
amount as may be outstanding hereunder, together with all accrued but unpaid
interest, in such coin or currency of the United States of America as at the
time shall be legal tender for the payment of public and private debts and in
immediately available funds, as provided in this secured convertible bridge note
(the "Note").
1. Automatic Exchange of Principal and Interest into Qualified Financing.
The outstanding principal amount of this Note together with all accrued but
unpaid interest hereunder (the "Outstanding Balance"), shall automatically be
exchanged into shares issued in an equity or equity based financing or a
combination of equity financings following the Issuance Date with gross proceeds
totaling at least $2,500,000 (the "Qualified Financing"); provided, however,
that for purposes of determining the number of equity securities, including
warrants issued in such Qualified Financing, to be received by the Payee upon
such exchange, the Payee shall be deemed to have tendered 110% of the
Outstanding Balance of the Note as payment of the purchase price in the
Qualified Financing. Upon such exchange pursuant to a Qualified Financing, the
Payee shall be deemed to be a purchaser in such Qualified Financing and shall be
granted all rights afforded a purchaser in the Qualified Financing.
2. In consideration for the loan evidenced by this Note, the Payee shall
be issued Bridge Warrants in the form attached as Exhibit A for the issuance of
80,000 shares of common stock of the Company at an exercise price of $.80 per
$100,000 of Note principal amount.
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3. Voluntary Conversion of Principal and Interest. At the option of the
Payee, the Outstanding Balance of this Note may be converted into common shares
of the Company at a price per share of $0.60 at any time the Note remains
outstanding.
4. Seniority and Ranking. This Note shall rank senior to the Maker's
currently issued and outstanding indebtedness and equity securities, other than
any current or future accounts receivable financing which amount may not exceed
$1,000,000. The Company shall not issue any securities or financial instruments
that rank senior to or pari-passu to this Note [(part of a series of separate
notes of the same form aggregating a total principal amount of up $500,000 (the
"Note or Notes")] without the prior written consent of the Payee.
5. Principal and Interest Payments.
(a) In the event the Company does not complete the Qualified
Financing, the Company shall repay the entire principal balance then outstanding
in cash on ______________, 2006 (the "Maturity Date").
(b) Interest on the outstanding principal balance of this Note shall
accrue at a rate of ten percent (10%) per annum. Interest on the outstanding
principal balance of the Note shall be computed on the basis of the actual
number of days elapsed and a year of three hundred and sixty-five (365) days and
shall be payable on the Maturity Date by the Company in cash or in shares of the
Company's equity securities. Furthermore, upon the occurrence of an Event of
Default, then to the extent permitted by law, the Company will pay interest to
the Payee, payable on demand, on the outstanding principal balance of the Note
from the date of the Event of Default until payment in full at the rate of
twelve percent (12%) per annum.
(c) At the Company's sole option, the Company may prepay the
outstanding principal amount of this Note plus all accrued and unpaid interest
in cash at any time without penalty prior to maturity. All payments made on
account of the indebtedness evidenced by this Note shall be applied first to
accrued but unpaid interest, if any, and the remainder shall be applied to
principal.
6. Non-Business Days. Whenever any payment to be made shall be due on a
Saturday, Sunday or a public holiday under the laws of the State of New York,
such payment may be due on the next succeeding business day and such next
succeeding day shall be included in the calculation of the amount of accrued
interest payable on such date.
7. Representations and Warranties of the Company. The Company represents
and warrants to the Payee as follows:
(a) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the state of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted.
(b) This Note has been duly authorized, validly executed and
delivered on behalf of the Company and is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors' rights generally, and the
Company has full power and authority to execute and deliver this Note and to
perform its obligations hereunder.
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(c) The execution, delivery and performance of this Note will not
(i) conflict with or result in a breach of or a default under any of the terms
or provisions of, (A) the Company's certificate of incorporation or by-laws, or
(B) any material provision of any indenture, mortgage, deed of trust or other
material agreement or instrument to which the Company is a party or by which it
or any of its material properties or assets is bound, (ii) result in a violation
of any material provision of any law, statute, rule, regulation, or any existing
applicable decree, judgment or order by any court, Federal or state regulatory
body, administrative agency, or other governmental body having jurisdiction over
the Company, or any of its material properties or assets or (iii) result in the
creation or imposition of any material lien, charge or encumbrance upon any
material property or assets of the Company or any of its subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a party or
by which any of them may be bound or to which any of their property or any of
them is subject.
(d) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Company
is required in connection with the valid execution and delivery of this Note.
8. Events of Default. The occurrence of any of the following events shall
be an "Event of Default" under this Note:
(a) the Company shall fail to make the payment of any amount of any
principal outstanding for a period of three (3) business days after the date
such payment shall become due and payable hereunder; or
(b) the Company shall fail to make any payment of interest for a
period of three (3) business days after the date such interest shall become due
and payable hereunder; or
(c) any representation, warranty or certification made by the
Company herein or in any certificate or financial statement shall prove to have
been false or incorrect or breached in a material respect on the date as of
which made; or
(d) the holder of any indebtedness of the Company or any of its
subsidiaries shall accelerate any payment of any amount or amounts of principal
or interest on any indebtedness (the "Indebtedness") (other than the
Indebtedness hereunder) prior to its stated maturity or payment date the
aggregate principal amount of which Indebtedness of all such persons is in
excess of $1,000,000, whether such Indebtedness now exists or shall hereinafter
be created, and such accelerated payment entitles the holder thereof to
immediate payment of such Indebtedness which is due and owing and such
indebtedness has not been discharged in full or such acceleration has not been
stayed, rescinded or annulled within ten (10) business days of such
acceleration; or
(e) A judgment or order for the payment of money shall be rendered
against the Company or any of its subsidiaries in excess of $1,000,000 in the
aggregate (net of any applicable insurance coverage) for all such judgments or
orders against all such persons (treating any deductibles, self insurance or
retention as not so covered) that shall not be discharged, and all such
judgments and orders remain outstanding, and there shall be any period of sixty
(60) consecutive days following entry of the judgment or order in excess of
$1,000,000 or the judgment or order which causes the aggregate amount described
above to exceed $1,000,000 during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in effect; or
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(f) the Company shall (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property or assets, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a voluntary
case under the Bankruptcy Code or under the comparable laws of any jurisdiction
(foreign or domestic), (iv) file a petition seeking to take advantage of any
bankruptcy, insolvency, moratorium, reorganization or other similar law
affecting the enforcement of creditors' rights generally, (v) acquiesce in
writing to any petition filed against it in an involuntary case under the
Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or
domestic), or (vi) take any action under the laws of any jurisdiction (foreign
or domestic) analogous to any of the foregoing; or
(g) a proceeding or case shall be commenced in respect of the
Company or any of its subsidiaries without its application or consent, in any
court of competent jurisdiction, seeking (i) the liquidation, reorganization,
moratorium, dissolution, winding up, or composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of it or of all or any substantial part of its assets or (iii) similar
relief in respect of it under any law providing for the relief of debtors, and
such proceeding or case described in clause (i), (ii) or (iii) shall continue
undismissed, or unstayed and in effect, for a period of thirty (30) consecutive
days or any order for relief shall be entered in an involuntary case under the
Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or
domestic) against the Company or any of its subsidiaries or action under the
laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing
shall be taken with respect to the Company or any of its subsidiaries and shall
continue undismissed, or unstayed and in effect for a period of thirty (30)
consecutive days; or
(h) the suspension from listing or the failure of the Common Stock
to be listed on the OTC Bulletin Board for a period of five (5) consecutive
trading days.
9. Remedies Upon An Event of Default. If an Event of Default shall have
occurred and shall be continuing, the Payee of this Note may at any time at its
option, (a) declare the entire unpaid principal balance of this Note, together
with all interest accrued hereon, due and payable, and thereupon, the same shall
be accelerated and so due and payable; provided, however, that upon the
occurrence of an Event of Default described in (i) Sections 8(f) and (g),
without presentment, demand, protest, or notice, all of which are hereby
expressly unconditionally and irrevocably waived by the Company, the outstanding
principal balance and accrued interest hereunder shall be automatically due and
payable, and (ii) Sections 8(a) through (e) and Section 8(h), the Payee may
exercise or otherwise enforce any one or more of the Payee's rights, powers,
privileges, remedies and interests under this Note or applicable law. No course
of delay on the part of the Payee shall operate as a waiver thereof or otherwise
prejudice the right of the Payee. No remedy conferred hereby shall be exclusive
of any other remedy referred to herein or now or hereafter available at law, in
equity, by statute or otherwise.
10. Replacement. Upon receipt of a duly executed, notarized and unsecured
written statement from the Payee with respect to the loss, theft or destruction
of this Note (or any replacement hereof), and without requiring an indemnity
bond or other security, or, in the case of a mutilation of this Note, upon
surrender and cancellation of such Note, the Company shall issue a new Note, of
like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated
Note.
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11. Parties in Interest, Transferability. This Note shall be binding upon
the Company and its successors and assigns and the terms hereof shall inure to
the benefit of the Payee and its successors and permitted assigns. This Note may
not be transferred or sold, subject to the provisions of Section 17 of this
Note, or pledged, hypothecated or otherwise granted as security by the Payee
without the prior written consent of the Company.
12. Amendments. This Note may not be modified or amended in any manner
except in writing executed by the Company and the Payee.
13. Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery by telecopy or facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The Company will give written notice to the Payee at least
thirty (30) days prior to the date on which the Company closes its books or
takes a record (x) with respect to any dividend or distribution upon the common
stock of the Company, (y) with respect to any pro rata subscription offer to
holders of common stock of the Company or (z) for determining rights to vote
with respect to a Major Transaction, dissolution, liquidation or winding-up and
in no event shall such notice be provided to such holder prior to such
information being made known to the public. The Company will also give written
notice to the Payee at least twenty (20) days prior to the date on which
dissolution, liquidation or winding-up will take place and in no event shall
such notice be provided to the Payee prior to such information being made known
to the public.
Address of the Payee:
Address of the Company: HiEnergy Technologies, Inc.
1601-b Alton Parkway
Irvine, CA 92606
Phone: (949) 757-0855
Fax: (949) 757-1477
Attention: Roger Spillmann
Corporate Secretary
14. Governing Law. This Note shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the choice of law provisions. This Note shall not be interpreted or
construed with any presumption against the party causing this Note to be
drafted.
15. Headings. Article and section headings in this Note are included
herein for purposes of convenience of reference only and shall not constitute a
part of this Note for any other purpose.
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16. Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity
(including, without limitation, a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a Payee's right to pursue actual damages for any failure by the
Company to comply with the terms of this Note. Amounts set forth or provided for
herein with respect to payments and the like (and the computation thereof) shall
be the amounts to be received by the Payee and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof).
17. Failure or Indulgence Not Waiver. No failure or delay on the part of
the Payee in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
18. Enforcement Expenses. The Company agrees to pay all costs and expenses
of enforcement of this Note, including, without limitation, reasonable
attorneys' fees and expenses.
19. Binding Effect. The obligations of the Company and the Payee set forth
herein shall be binding upon the successors and assigns of each such party,
whether or not such successors or assigns are permitted by the terms hereof.
20. Compliance with Securities Laws. The Payee of this Note acknowledges
that this Note is being acquired solely for the Payee's own account and not as a
nominee for any other party, and for investment, and that the Payee shall not
offer, sell or otherwise dispose of this Note other than in compliance with the
laws of the United States of America and as guided by the rules of the
Securities and Exchange Commission. This Note and any Note issued in
substitution or replacement therefore shall be stamped or imprinted with a
legend in substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR WAVE WIRELESS CORPORATION SHALL HAVE
RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
21. Severability. The provisions of this Note are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
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22. Consent to Jurisdiction. Each of the Company and the Payee (i) hereby
irrevocably submits to the jurisdiction of the United States District Court
sitting in the Southern District of New York and the courts of the State of New
York located in New York county for the purposes of any suit, action or
proceeding arising out of or relating to this Note and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the Payee
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address set forth in Section 10
hereof and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing in this Section 19 shall affect or limit
any right to serve process in any other manner permitted by law.
23. Company Waivers. Except as otherwise specifically provided herein, the
Company and all others that may become liable for all or any part of the
obligations evidenced by this Note, hereby waive presentment, demand, notice of
nonpayment, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, and do hereby
consent to any number of renewals of extensions of the time or payment hereof
and agree that any such renewals or extensions may be made without notice to any
such persons and without affecting their liability herein and do further consent
to the release of any person liable hereon, all without affecting the liability
of the other persons, firms or Company liable for the payment of this Note, AND
DO HEREBY WAIVE TRIAL BY JURY.
(a) No delay or omission on the part of the Payee in exercising its
rights under this Note, or course of conduct relating hereto, shall operate as a
waiver of such rights or any other right of the Payee, nor shall any waiver by
the Payee of any such right or rights on any one occasion be deemed a waiver of
the same right or rights on any future occasion.
(b) THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE
IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE
LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY
PREJUDGMENT REMEDY WHICH THE PAYEE OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO
USE.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has executed and delivered this Note
as of the date first written above.
HiEnergy Technologies, Inc.
By:
-------------------------------------------
Name: Bogdan C. Maglich
Title: Chairman and Chief Executive Officer
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EXHIBIT A
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR HIENERGY TECHNOLOGIES, INC. SHALL HAVE
RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
HIENERGY TECHNOLOGIES, INC.
Holder:
Warrant No.: W-
Number of Warrant Shares:
Exercise Price: $0.80 per Warrant Share
Original Issue Date:
Expiration Date:
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, HiEnergy Technologies, Inc., a Delaware corporation (together with
its successors and assigns, the "Issuer"), hereby certifies that the Holder or
its registered assign or assigns (individually or collectively referred to as
the "Holder") is entitled to subscribe for and purchase, during the period
defined below in this Warrant as the Term, the number of Warrant Shares
indicated above shares (subject to adjustment as hereinafter provided) of the
duly authorized, validly issued, fully paid and non-assessable shares of the
Issuer's Common Stock, as defined below in this Warrant, at an exercise price
per share equal to the Warrant Price then in effect, subject, however, to the
provisions and upon the terms and conditions hereinafter set forth.
1. Definitions. For the purposes of this Warrant, the following terms have the
following meanings:
"Board" means the Board of Directors of the Issuer.
"Business Day" means any day except a Saturday, Sunday or any day on which
commercial banks in Irvine, California or New York, New York are authorized or
required by law or other government action to close.
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"Capital Stock" means and includes (i) any and all shares, interests,
participations or other equivalents of or interests in (however designated)
corporate stock, including, without limitation, shares of preferred or
preference stock, (ii) all partnership interests (whether general or limited) in
any Person which is a partnership, (iii) all membership interests or limited
liability company interests in any limited liability company, and (iv) all
equity or ownership interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of Incorporation of
the Issuer as in effect on the Original Issue Date, and as hereafter from time
to time amended, modified, supplemented or restated in accordance with the terms
hereof and thereof and pursuant to applicable law.
"Common Stock" means the Common Stock, par value $0.001 per share, of the
Issuer and any other Capital Stock into which such stock may hereafter be
changed.
"Exercise Date" means the date that the amount payable under Section 3(b)
is received in full by the Issuer in immediately available U.S. dollar
denominated funds in the account of the Issuer at a financial institution
designated from time to time by the Issuer pursuant to the Note; or the date the
Holder executes the cashless exercise provision provided for herein and pursuant
to the conditions set forth Section 3 (c).
"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority, commission,
board, agency or instrumentality, whether federal, state or local, and whether
domestic or foreign.
"Holders" mean the Persons who shall from time to time own any Warrant.
The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of the Issuer) that is regularly engaged in the business of
appraising the Capital Stock or assets of corporations or other entities as
going concerns, and which is not affiliated with either the Issuer or the Holder
of any Warrant.
"Issuer" means HiEnergy Technologies, Inc., a Delaware corporation, and
its successors.
"Majority Holders" means at any time the Holders of Warrants exercisable
for a majority of the Warrant Shares issuable under the Warrants at the time
outstanding.
"Note" means the Senior Convertible Promissory Bridge Note dated as of
__________, 2005 between the Issuer and the investor, or Payee, thereto.
"Original Issue Date" means the date of the Closing as defined in the
Note.
"OTC Bulletin Board" means the over-the-counter electronic bulletin board.
"Other Common" means any other Capital Stock of the Issuer of any class
which shall be authorized at any time after the date of this Warrant (other than
Common Stock) and which shall have the right to participate in the distribution
of earnings and assets of the Issuer without limitation as to amount.
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"Person" means an individual, corporation, limited liability company,
partnership, joint stock company, trust, unincorporated organization, joint
venture, Governmental Authority or other entity of whatever nature.
"Per Share Market Value" means on any particular date (a) the closing sale
price for a share of Common Stock in the over-the-counter market, as reported by
the OTC Bulletin Board or in the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of reporting prices),
or as reported by such other senior United States trading facility as the Issuer
may elect, at the close of business on such date, or (b) if the Common Stock is
not then reported by the OTC Bulletin Board or the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of
reporting prices) or by such other senior United States trading facility as the
Issuer may elect, then the average of the "Pink Sheet" quotes for the relevant
conversion period, as determined in good faith by the Board, or (c) if the
Common Stock is not then publicly traded the fair market value of a share of
Common Stock as determined by the Board in good faith; provided, however, that
the Majority Holders, after receipt of the determination by the Board, shall
have the right to select, jointly with the Issuer, an Independent Appraiser, in
which case, the fair market value shall be the determination by such Independent
Appraiser; and provided, further that all determinations of the Per Share Market
Value shall be appropriately adjusted for any stock dividends, stock splits or
other similar transactions during such period. The determination of fair market
value shall be based upon the fair market value of the Issuer determined on a
going concern basis as between a willing buyer and a willing seller and taking
into account all relevant factors determinative of value, and shall be final and
binding on all parties. In determining the fair market value of any shares of
Common Stock, no consideration shall be given to any restrictions on transfer of
the Common Stock imposed by agreement or by federal or state securities laws, or
to the existence or absence of, or any limitations on, voting rights.
"Securities" means any debt or equity securities of the Issuer, whether
now or hereafter authorized, any instrument convertible into or exchangeable for
Securities or a Security, and any option, warrant or other right to purchase or
acquire any Security. "Security" means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose outstanding
Voting Stock shall at the time be owned directly or indirectly by the Issuer or
by one or more of its Subsidiaries, or by the Issuer and one or more of its
Subsidiaries.
"Term" has the meaning specified in Section 2 hereof.
"Trading Day" means (a) a day on which the Common Stock is traded on the
OTC Bulletin Board, or (b) if the Common Stock is not traded on the OTC Bulletin
Board, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices) or such
other senior United States trading facility as in the issuer may elect;
provided, however, that in the event that the Common Stock is not listed or
quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day
except Saturday, Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the State of New York are authorized or required
by law or other government action to close.
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"Voting Stock" means, as applied to the Capital Stock of any corporation,
Capital Stock of any class or classes (however designated) having ordinary
voting power for the election of a majority of the members of the Board of
Directors (or other governing body) of such corporation, other than Capital
Stock having such power only by reason of the happening of a contingency.
"Warrants" means the Warrants issued and sold pursuant to the Note,
including, without limitation, this Warrant, and any other warrants of like
tenor issued in substitution or exchange for any thereof pursuant to the
provisions of Section 3(c), 3(d) or 3(e) hereof or of any of such other
Warrants.
"Warrant Price" initially means U.S. $0.80, as such price may be adjusted
from time to time as shall result from the adjustments specified in this
Warrant, including Section 5 hereto.
"Warrant Share Number" means at any time the aggregate number of Warrant
Shares which may at such time be purchased upon exercise of this Warrant, after
giving effect to all prior adjustments to such number made or required to be
made under the terms hereof.
"Warrant Shares" means shares of Common Stock issuable upon exercise of
any Warrant or Warrants or otherwise issuable pursuant to any Warrant or
Warrants.
2. Term. The right to subscribe for and purchase Warrant Shares represented
hereby shall commence on _____________, 2005 and shall expire at 5:00 pm,
Eastern Time, on _____________, 2008 such period sometimes herein called the
"Term").
3. Method of Exercise and Payment; Issuance of New Warrant Certificates;
Transfer and Exchange.
(a) Time of Exercise. The purchase rights represented by this Warrant may
be exercised in whole or in part at any time and from time to time during the
Term, and this Warrant shall be considered exercised on the date (the "Exercise
Date") that the amount payable under Section 3(b) is received in full by the
Issuer in immediately available U.S. dollar denominated funds in the account of
the Issuer at a financial institution designated from time to time by the Issuer
pursuant to the Note; or Warrant shall be considered exercised on the date the
Holder executes the cashless exercise provision provided for herein and pursuant
to the conditions set forth Section 3(c).
(b) Method of Exercise. The Holder hereof may exercise this Warrant, in
whole or in part, by (1) a facsimile transmission executed and sent to the
attention of the Secretary of the Company, and (2) the physical surrender on the
next Trading Day of this Warrant (with the exercise form attached hereto duly
executed) at the principal office of the Issuer, and (2) by the payment in full
to the order of the Issuer on the next trading day of an amount of consideration
therefor equal to the Warrant Price in effect on the Exercise Date multiplied by
the number of Warrant Shares with respect to which this Warrant is then being
exercised, payable in immediately available U.S. dollar denominated funds by
check or by wire to the account of the Issuer at a financial institution
designated from time to time by the Issuer pursuant to the Note.
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(c) Cashless Exercise. Notwithstanding any provisions herein to the
contrary, if the underlying securities are not registered by __________, 2006
[one-year] then the Holder may exercise this Warrant by cashless exercise,
wherein, in lieu of exercising this Warrant by payment of cash, the Holder shall
receive the number of shares of Common Stock equal to the amount determined
below upon surrender of this Warrant at the principal office of the Issuer
together with a properly endorsed Notice of Exercise in which event the Issuer
shall issue to the Holder a number of shares of Common Stock computed using the
following formula:
X = Y - (A)(Y)
------
B
Where:
X = the number of shares of Common Stock to be issued to the Holder;
Y = the number of shares of Common Stock purchasable upon exercise of
all of the Warrant or, if a partial exercise, the number of shares
underlying the portion being exercised;
A = the Exercise Price;
B = the Per Share Market Value of one share of Common Stock.
The Holder may exercise this warrant by cashless exercise if the closing bid
price for one share of Common Stock at the close of business on the date of
exercise in the over-the-counter market as reported by the OTC Bulletin Board,
or as reported in the National Quotation Bureau Incorporated or similar
organization or agency succeeding to its functions of reporting prices, or as
reported by such other senior United States trading facility as the Issuer may
elect (the "Per Share Market Price"), is less than the Exercise Price and the
Warrant remains unregistered on the date of exercise.
(d) Issuance of Stock Certificates. In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms
and conditions hereof, (i) certificates for the Warrant Shares so purchased
shall be dated as of the Exercise Date and delivered to the Holder hereof within
a reasonable time, not exceeding three (3) Trading Days after the Exercise Date,
and the Holder hereof shall be deemed for all purposes to be the Holder of the
Warrant Shares so purchased as of the Exercise Date and (ii) unless this Warrant
has expired, a new Warrant representing the number of Warrant Shares, if any,
with respect to which this Warrant shall not then have been exercised (less any
amount thereof which shall have been canceled in payment or partial payment of
the Warrant Price as hereinabove provided) shall also be issued to the Holder
hereof at the Issuer's expense within such time.
(e) Transferability of Warrant. Subject to Section 3(g), this Warrant may
be transferred by a Holder without the consent of the Issuer. If transferred
pursuant to this paragraph, and subject to the provisions of Section 3 (g), this
Warrant may be transferred on the books of the Issuer by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Issuer, properly endorsed (by the Holder executing an
assignment in the form attached hereto) and upon payment of any necessary
transfer tax or other governmental charge imposed upon such transfer. This
Warrant is exchangeable at the principal office of the Issuer for Warrants for
the purchase of the same aggregate number of Warrant Shares, each new Warrant to
represent the right to purchase such number of Warrant Shares as the Holder
hereof shall designate at the time of such exchange. All Warrants issued on
transfers or exchanges shall be dated the Original Issue Date and shall be
identical with this Warrant except as to the number of Warrant Shares issuable
pursuant hereto.
13
(f) Continuing Rights of Holder. The Issuer will, at the time of or at any
time after each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing the extent, if any, of its continuing obligation to
afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.
(g) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof, acknowledges that
this Warrant or the Warrant Shares to be issued upon exercise hereof are
being acquired solely for the Holder's own account and not as a nominee
for any other party, and for investment, and that the Holder will not
offer, sell or otherwise dispose of this Warrant or any Warrant Shares to
be issued upon exercise hereof except pursuant to an effective
registration statement, or an exemption from registration, under the
Securities Act and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this Warrant and all
certificates representing Warrant Shares issued upon exercise hereof shall
be stamped or imprinted with a legend in substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR HIENERGY
TECHNOLOGIES, INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
(iii) The restrictions imposed by this subsection (g) upon the transfer of
this Warrant or the Warrant Shares to be purchased upon exercise hereof
shall terminate (A) when such securities shall have been resold pursuant
to an effective registration statement under the Securities Act, (B) upon
the Issuer's receipt of an opinion of counsel, in form and substance
reasonably satisfactory to the Issuer, addressed to the Issuer to the
effect that such restrictions are no longer required to ensure compliance
with the Securities Act and state securities laws or (C) upon the Issuer's
receipt of other evidence reasonably satisfactory to the Issuer that such
registration and qualification under the Securities Act and state
securities laws are not required. Whenever such restrictions shall cease
and terminate as to any such securities, the Holder thereof shall be
entitled to receive from the Issuer (or its transfer agent and registrar),
without expense (other than applicable transfer taxes, if any), new
Warrants (or, in the case of Warrant Shares, new stock certificates) of
like tenor not bearing the applicable legend required by paragraph (ii)
above relating to the Securities Act and state securities laws.
4. Stock Fully Paid; Reservation and Listing of Shares; Covenants.
(a) Stock Fully Paid. The Issuer represents, warrants, covenants and
agrees that all Warrant Shares which may be issued upon the exercise of this
Warrant or any shares of capital stock otherwise issuable hereunder will, upon
issuance, be duly authorized, validly issued, fully paid and non-assessable and
free from all taxes, liens and charges created by, through or under Issuer,
other than resale restrictions under the federal or state securities laws.
14
(b) Reservation. The Issuer covenants and agrees that during the period
within which this Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant. If any shares of Common Stock required to be reserved
for issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any governmental authority under any
federal or state law before such shares may be so issued, the Issuer will, upon
notice from the Holder of such requirement, in good faith use its best efforts
as expeditiously as possible at its expense to cause such shares to be duly
registered or qualified. If the Issuer shall list any shares of Common Stock on
any securities exchange or market it will, at its expense, list thereon,
maintain and increase when necessary such listing, of, all Warrant Shares from
time to time issued upon exercise of this Warrant or as otherwise provided
hereunder, and, to the extent permissible under the applicable securities
exchange rules, all unissued Warrant Shares which are at any time issuable
hereunder, so long as any shares of Common Stock shall be so listed. The Issuer
will also so list on each securities exchange or market, and will maintain such
listing of, any other securities which the Holder of this Warrant shall be
entitled to receive upon the exercise of this Warrant if at the time any
securities of the same class shall be listed on such securities exchange or
market by the Issuer.
(c) Covenants. The Issuer shall not by any action, including, without
limitation, amending the Certificate of Incorporation or the by-laws of the
Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the Certificate of Incorporation or by-laws of the
Issuer in any manner that would adversely affect the rights of the Holders of
the Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this Warrant,
and (iv) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.
(d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
5. Adjustment of Warrant Price and Warrant Share Number. The number of shares of
Common Stock for which this Warrant is exercisable, and the price at which such
shares may be purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 5. The Issuer shall
give the Holder notice of any event described below which requires an adjustment
pursuant to this Section 5 in accordance with Section 6.
15
(a) Recapitalization, Reorganization, Reclassification, Consolidation,
Merger or Sale.
(i) In case the Issuer after the Original Issue Date shall do any of
the following (each, a "Triggering Event"): (a) consolidate with or merge
into any other Person and the Issuer shall not be the continuing or
surviving corporation of such consolidation or merger, or (b) permit any
other Person to consolidate with or merge into the Issuer and the Issuer
shall be the continuing or surviving Person but, in connection with such
consolidation or merger, any Capital Stock of the Issuer shall be changed
into or exchanged for Securities of any other Person or cash or any other
property, or (c) transfer all or substantially all of its properties or
assets to any other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, then, and in the case of each such
Triggering Event, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Warrant, the Holder of
this Warrant shall be entitled upon the exercise hereof at any time after
the consummation of such Triggering Event, to the extent this Warrant is
not exercised prior to such Triggering Event, to receive at the Warrant
Price in effect at the time immediately prior to the consummation of such
Triggering Event in lieu of the Common Stock issuable upon such exercise
of this Warrant prior to such Triggering Event, the Securities, cash and
property to which such Holder would have been entitled upon the
consummation of such Triggering Event if such Holder had exercised the
rights represented by this Warrant immediately prior thereto, subject to
adjustments (subsequent to such corporate action) as nearly equivalent as
possible to the adjustments provided for elsewhere in this Section 5.
(ii) Notwithstanding anything contained in this Warrant to the
contrary, the Issuer will not effect any Triggering Event if, prior to the
consummation thereof, each Person (other than the Issuer) which may be
required to deliver any Securities, cash or property upon the exercise of
this Warrant as provided herein shall assume, by written instrument
delivered to, and reasonably satisfactory to, the Holder of this Warrant,
(A) the obligations of the Issuer under this Warrant (and if the Issuer
shall survive the consummation of such Triggering Event, such assumption
shall be in addition to, and shall not release the Issuer from, any
continuing obligations of the Issuer under this Warrant) and (B) the
obligation to deliver to such Holder such shares of Securities, cash or
property as, in accordance with the foregoing provisions of this
subsection (a), such Holder shall be entitled to receive, and such Person
shall have similarly delivered to such Holder an opinion of counsel for
such Person, which counsel shall be reasonably satisfactory to such
Holder, stating that this Warrant shall thereafter continue in full force
and effect and the terms hereof (including, without limitation, all of the
provisions of this subsection (a)) shall be applicable to the Securities,
cash or property which such Person may be required to deliver upon any
exercise of this Warrant or the exercise of any rights pursuant hereto.
(b) Stock Dividends, Subdivisions and Combinations. If at any time the
Issuer shall:
(i) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend payable in, or other distribution
of, shares of Common Stock,
16
(ii) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, then (1) the number of shares of Common
Stock for which this Warrant is exercisable immediately after the
occurrence of any such event shall be adjusted to equal the number of
shares of Common Stock which a record holder of the same number of shares
of Common Stock for which this Warrant is exercisable immediately prior to
the occurrence of such event would own or be entitled to receive after the
happening of such event, and (2) the Warrant Price then in effect shall be
adjusted to equal (A) the Warrant Price then in effect multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares of
Common Stock for which this Warrant is exercisable immediately after such
adjustment.
(c) Form of Warrant after Adjustments. The form of this Warrant need not
be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.
(d) Escrow of Warrant Shares. If after any property becomes distributable
pursuant to this Section 5 by reason of the taking of any record of the holders
of Common Stock, but prior to the occurrence of the event for which such record
is taken, and the Holder exercises this Warrant, any shares of Common Stock
issuable upon exercise by reason of such adjustment shall be deemed the last
shares of Common Stock for which this Warrant is exercised (notwithstanding any
other provision to the contrary herein) and such shares or other property shall
be held in escrow for the Holder by the Issuer to be issued to the Holder upon
and to the extent that the event actually takes place, upon payment of the
current Warrant Price. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be cancelled by the Issuer and
escrowed property returned.
6. Notice of Adjustments. Whenever the Warrant Price or Warrant Share Number
shall be adjusted pursuant to Section 5 hereof (for purposes of this Section 6,
each an "adjustment"), the Issuer shall cause its Chief Financial Officer to
prepare and execute a certificate setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Board made any determination hereunder), and the Warrant Price and Warrant Share
Number after giving effect to such adjustment, and shall cause copies of such
certificate to be delivered to the Holder of this Warrant promptly after each
adjustment. Any dispute between the Issuer and the Holder of this Warrant with
respect to the matters set forth in such certificate may at the option of the
Holder of this Warrant be submitted to one of the national accounting firms
currently known as the "big five" selected by the Holder, provided that the
Issuer shall have ten (10) days after receipt of notice from such Holder of its
selection of such firm to object thereto, in which case such Holder shall select
another such firm and the Issuer shall have no such right of objection. The firm
selected by the Holder of this Warrant as provided in the preceding sentence
shall be instructed to deliver a written opinion as to such matters to the
Issuer and such Holder within thirty (30) days after submission to it of such
dispute. Such opinion shall be final and binding on the parties hereto.
7. Fractional Shares. No fractional Warrant Shares will be issued in connection
with and exercise hereof, but in lieu of such fractional shares, the Issuer
shall make a cash payment therefore equal in amount to the product of the
applicable fraction multiplied by the Per Share Market Value then in effect.
17
8. Call. Notwithstanding anything herein to the contrary, commencing any time
during the effectiveness of the registration statement registering the Warrant
Shares, or at such time the Holder has the right to effect a cashless exercise,
the Issuer, at its option, may call up to one hundred percent (100%) of this
Warrant if the Per Share Market Value of the Common Stock has been equal to or
greater than $2.00 per share for a period of five (5) consecutive Trading Days
immediately prior to the date of delivery of the Call Notice (a "Call Notice
Period") by providing the Holder of this Warrant written notice pursuant to
Section 13 (the "Call Notice"). The rights and privileges granted pursuant to
this Warrant with respect to the Warrant Shares subject to the Call Notice (the
"Called Warrant Shares") shall expire on the twentieth (20th) day after the
Holder receives the Call Notice (the "Early Termination Date") if this Warrant
is not exercised with respect to such Called Warrant Shares prior to such Early
Termination Date. In the event this Warrant is not exercised with respect to the
Called Warrant Shares, the Issuer shall remit to the Holder of this Warrant (i)
$.01 per Called Warrant Share and (ii) a new Warrant representing the number of
Warrant Shares, if any, which shall not have been subject to the Call Notice
upon the Holder tendering to the Issuer the applicable Warrant certificate.
9. Ownership Cap and Certain Exercise Restrictions.
(a) Notwithstanding anything to the contrary set forth in this Warrant, at
no time may a holder of this Warrant exercise this Warrant if the number of
shares of Common Stock to be issued pursuant to such exercise would exceed, when
aggregated with all other shares of Common Stock owned by such holder at such
time, the number of shares of Common Stock which would result in such holder
owning more than 4.999% of all of the Common Stock outstanding at such time;
provided, however, that upon a holder of this Warrant providing the Issuer with
sixty-one (61) days notice (pursuant to Section 13 hereof) (the "Waiver Notice")
that such holder would like to waive this Section 9(a) with regard to any or all
shares of Common Stock issuable upon exercise of this Warrant, this Section 9(a)
will be of no force or effect with regard to all or a portion of the Warrant
referenced in the Waiver Notice; provided, further, that this provision shall be
of no further force or effect during the sixty-one (61) days immediately
preceding the expiration of the term of this Warrant.
(b) The Holder may not exercise the Warrant hereunder to the extent such
exercise would result in the Holder beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 9.999% of the then issued and outstanding shares of Common Stock,
including shares issuable upon exercise of the Warrant held by the Holder after
application of this Section; provided, however, that upon a holder of this
Warrant providing the Company with a Waiver Notice that such holder would like
to waive this Section 9(b) with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 9(b) shall be of no force
or effect with regard to those Warrant Shares referenced in the Waiver Notice;
provided, further, that this provision shall be of no further force or effect
during the sixty-one (61) days immediately preceding the expiration of the term
of this Warrant.
10. Other Notices. In case at any time:
(a) the Issuer shall make any distributions to the holders of Common
Stock; or
18
(b) the Issuer shall authorize the granting to all holders of its Common
Stock of rights to subscribe for or purchase any shares of Capital Stock of any
class or other rights; or
(c) there shall be any reclassification of the Capital Stock of the
Issuer; or
(d) there shall be any capital reorganization by the Issuer; or
(e) there shall be any (i) consolidation or merger involving the Issuer or
(ii) sale, transfer or other disposition of all or substantially all of the
Issuer's property, assets or business (except a merger or other reorganization
in which the Issuer shall be the surviving corporation and its shares of Capital
Stock shall continue to be outstanding and unchanged and except a consolidation,
merger, sale, transfer or other disposition involving a wholly-owned
Subsidiary); or
(f) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Issuer or any partial liquidation of the Issuer or
distribution to holders of Common Stock; then, in each of such cases, the Issuer
shall give written notice to the Holder of the date on which (i) the books of
the Issuer shall close or a record shall be taken for such dividend,
distribution or subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be, shall take place. Such notice also shall
specify the date as of which the holders of Common Stock of record shall
participate in such dividend, distribution or subscription rights, or shall be
entitled to exchange their certificates for Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding-up, as the case may be.
Such notice shall be given at least twenty (20) days prior to the action in
question and not less than twenty (20) days prior to the record date or the date
on which the Issuer's transfer books are closed in respect thereto. The Holder
shall have the right to send two (2) representatives selected by it to each
meeting, who shall be permitted to attend, but not vote at, such meeting and any
adjournments thereof. This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.
11. Amendment and Waiver. Any term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Issuer and the
Majority Holders; provided, however, that no such amendment or waiver shall
reduce the Warrant Share Number, increase the Warrant Price, shorten the period
during which this Warrant may be exercised or modify any provision of this
Section 11 except with the consent of the Holder of this Warrant or pursuant to
this Warrant Agreement.
12. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW.
13. Notices. All notices, requests, consents or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., eastern
time, on a Business Day, or if not, then on the next Business Day, (ii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service specifying next-day delivery with verification of
delivery or (iii) actual receipt by the party to whom such notice is required to
be given. The addresses for such communications shall be at the relevant
Holder's last known address or facsimile number appearing on the books of the
Issuer maintained for such purposes, or with respect to the Issuer, addressed
to:
19
HiEnergy Technologies, Inc.
Attn: Corporate Secretary
1601B Alton Parkway
Irvine, California 92606
Tel. No.: (949) 757-0855
Fax No.: (949) 757-1477
with a copy to:
August Law Group, P.C.
Attn: Kenneth S. August, Esq.
The Atrium
19200 Von Karman Ave., Suite 500
Irvine, CA 92612
Tel No.: (949) 752-7772
Fax No.: (949) 752-7776
Copies of notices to the Holder shall be sent to the attorney indicated in the
signature pages to this Warrant. Any party hereto may from time to time change
its or its attorney's address for notices by giving at least ten (10) days
written notice of such changed address to the other party hereto.
14. Warrant Transfer Agent. The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent or more than one agent having an office in New
York, New York for the purpose of being directly involved with Holder in respect
to issuing Warrant Shares upon the exercise of this Warrant pursuant to
subsections (b) and (c) of Section 3 hereof, transferring or exchanging this
Warrant or any Warrant Certificate pursuant to subsection (e) of Section 3
hereof or replacing this Warrant or any Warrant Certificate pursuant to
subsection (d) of Section 4 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent or agents, as designated from time to time by the
Issuer.
15. Remedies. The Issuer stipulates that the remedies at law of the Holder of
this Warrant in the event of any default or threatened default by the Issuer in
the performance of or compliance with any of the terms of this Warrant, and the
Holder likewise stipulates that the remedies at law of the Issuer, are not and
will not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein, interim relief, or by an injunction for
performance or against a violation of any of the terms hereof. This Warrant is
acquired by the Holder pursuant to and subject to the terms of the Note.
16. Successors and Assigns. All respective rights, powers and privileges and
respective obligations evidenced by this Warrant shall inure to the benefit of
and be binding upon the Issuer and only the registered successors and registered
assigns of the Holder hereof and (to the extent provided herein) the Holders of
Warrant Shares issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Shares.
20
17. Modification and Severability. If, in any action before any court or agency
legally empowered to enforce any provision contained herein, any provision
hereof is found to be unenforceable, then such provision shall be deemed
modified to the extent necessary to make it enforceable by such court or agency.
If any such provision is not enforceable as set forth in the preceding sentence,
the unenforceability of such provision shall not affect the other provisions of
this Warrant, but this Warrant shall be construed as if such unenforceable
provision had never been contained herein.
18. Headings. The headings of the Sections of this Warrant are for convenience
of reference only and shall not, for any purpose, be deemed to modify any other
term or provision of this Agreement.
IN WITNESS WHEREOF, the Issuer has executed this Warrant to Purchase Shares of
Common Stock of HiEnergy Technologies, Inc., Warrant No. W-___, as of the date
first above written.
HIENERGY TECHNOLOGIES, INC., a Delaware
corporation
By:
------------------------------------
Dr. Bogdan C. Maglich
Chief Executive Officer
21
Schedule A
(Accurate only as of the date of the date first set forth above, and subject to
future changes in the registered Holder as listed above and successors and
assigns registered pursuant to the Warrant.)
Registered Holder Copy To
- ----------------- -------
22
HIENERGY TECHNOLOGIES, INC.
EXERCISE FORM
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase ________ shares of Common Stock of HiEnergy
Technologies, Inc. covered by the within Warrant.
Dated: _________________
Signature: ___________________________
Address: _____________________
_____________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: _________________
Signature: ___________________________
Address: _____________________
_____________________
PARTIAL ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ Warrant Shares evidenced by
the within Warrant together with all rights therein, and does irrevocably
constitute and appoint ___________________, attorney, to transfer that part of
the said Warrant on the books of the within named corporation.
Dated: _________________
Signature: ___________________________
Address: _____________________
_____________________
23
HIENERGY TECHNOLOGIES, INC.
CASHLESS EXERCISE FORM
(To be executed upon exercise of Warrant pursuant to Section 3(c) )
The undersigned ______________hereby irrevocably elects a cashless exercise of
the right of purchase represented by the within the Warrant for, and to purchase
thereunder, ______________ shares of Common Stock, as provided for in Section 3
(c) therein.
If said number of shares shall not be all the shares purchasable under the
within the Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder
rounded up to the next higher number of shares.
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional shares to:
NAME: ______________________________________________
(Please Print Name)
ADDRESS: ___________________________________________
___________________________________________
SOCIAL SECURITY NUMBER: ____________________________
SIGNATURE: _________________________________________
NOTE: The above signature should correspond exactly with the name on the first
page of this Warrant or with the name the assignee appearing in the assignment
form on the preceding page.
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